NEW YORK - TelAve -- Australian wool prices have climbed sharply in early 2026, with the benchmark Eastern Market Indicator (EMI) rising 38% year-over-year. The rally marks a dramatic reversal after three years of subdued prices and signals a new era of competition for the world's finest natural fibers.

As of mid-March 2026, the EMI stands at 1,751 cents per kilogram. Superfine Merino types are commanding premiums well above that baseline, with 18-micron wool trading at 2,311 c/kg and 19-micron lots fetching 2,173 c/kg. The indicator reached its highest point since June 2019 before easing slightly in the most recent auction series.

China Drives Demand

The dominant force behind the rally is renewed buying power from Chinese textile manufacturers. At recent Australian auctions, Chinese direct mill buyers secured 48.4% of all Merino fleece sold. In Sydney, a single major Chinese top maker acquired more than 36% of the Merino fleece offered on the final auction day.

Kelvin Shelley, Victorian manager at Australian Wool Network, confirmed that "new business from China is definitely the main driver of the market." Italian mills, which had been working through post-COVID oversupply, are also returning to the market as that pipeline has cleared.

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Supply Squeeze Is Structural

Analysts say the more powerful driver is a deepening supply crunch. Josh Lamb, president of the Australian Council of Wool Exporters and Processors, noted the rally was "probably more off the back of supply concerns," adding that tighter supply "is likely to be the case for quite a while yet."

Australia's sheep flock has declined to approximately 63.7 million head. Dry conditions, competitive sheepmeat prices, and shearing labor shortages are all constraining output. Wool production is also falling in South Africa and Uruguay, making this a global supply contraction.

What This Means for Luxury Fiber Brands

The combination of constrained supply and growing demand -- particularly for superfine Merino in the 15- to 19-micron range -- means sourcing the finest fibers will become increasingly competitive. The Asia-Pacific region accounts for nearly 47% of global wool market revenue. As consumers continue to favor natural, biodegradable fibers over synthetics, structural demand for Merino is expected to remain strong. Industry analysts caution that all conditions are in place for another significant price increase if demand picks up even modestly.

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